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Goodwill and Identifiable Intangibles | 12 Months Ended
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Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Identifiable Intangible Assets | 10. Goodwill and Identifiable Intangible Assets Goodwill We test goodwill for impairment at least annually, during the second quarter, and on an interim basis if an event or circumstance indicates that there is a triggering event that would make it more likely than not that an impairment loss had been incurred. During the second quarter ended June 30, 2020, we performed a qualitative assessment of impairment for goodwill for each of our three reporting units. We considered events and circumstances that may affect the fair value of each reporting unit to determine whether it is necessary to perform the quantitative impairment test. We focused on events or circumstances that could affect the significant inputs, including, but not limited to, financial performance, such as negative or declining cash flows, a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods, competitive, economic, industry and market considerations, and other factors that have or could impact each of our reporting units. If we determine that it is more likely than not that the goodwill is impaired, then we would perform a quantitative impairment test. The results of our qualitative assessment performed during the second quarter ended June 30, 2020, was that there were no triggering events that would make it more likely than not that an impairment loss to our goodwill has been incurred for any of our three reporting units. Changes in the net carrying amount of goodwill by segment were as follows:
(in millions) | ACCO Brands North America |  | ACCO Brands EMEA |  | ACCO Brands International |  | Total
Balance at December 31, 2018 | $ | 375.6 |  |  | $ | 165.6 |  |  | $ | 167.7 |  |  | $ | 708.9 |
Acquisitions(1) | — |  |  | — |  |  | 10.1 |  |  | 10.1 |
Foreign currency translation | — |  |  | 0.1 |  |  | (0.5) |  |  | (0.4) |
Balance at December 31, 2019 | 375.6 |  |  | 165.7 |  |  | 177.3 |  |  | 718.6 |
Acquisitions(1) | 85.6 |  |  | — |  |  | 3.9 |  |  | 89.5 |
Foreign currency translation | — |  |  | 22.5 |  |  | (3.2) |  |  | 19.3 |
Balance at December 31, 2020 | $ | 461.2 |  |  | $ | 188.2 |  |  | $ | 178.0 |  |  | $ | 827.4 |
(1) Goodwill has been recorded on our Consolidated Balance Sheet related to the PowerA Acquisition and represents the excess of the cost of the PowerA Acquisition when compared to the fair value estimate of the net assets acquired on December 17, 2020 (the date of the PowerA Acquisition). Goodwill has been recorded on our Consolidated Balance Sheet related to the Foroni Acquisition and represents the excess of the cost of the Foroni Acquisition when compared to the fair value estimate of the net assets acquired on August 1, 2019 (the effective date of the Foroni Acquisition). Goodwill has been recorded on our Consolidated Balance Sheet related to the GOBA Acquisition and represents the excess of the cost of the GOBA Acquisition when compared to the fair value estimate of the net assets acquired on July 2, 2018 (the date of the GOBA Acquisition). See "Note 3. Acquisitions" for details on the calculation of the goodwill acquired in the acquisitions. The goodwill balance includes $215.1 million of accumulated impairment losses, which occurred prior to December 31, 2016. The authoritative guidance on goodwill and other intangible assets requires that goodwill be tested for impairment at a reporting unit level. We have determined that our reporting units are ACCO Brands North America, ACCO Brands EMEA and ACCO Brands International. We test goodwill for impairment at least annually and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. The Company performed this annual assessment, on a qualitative basis, as allowed by GAAP, in the second quarter of 2020 and concluded that no impairment existed. A considerable amount of management judgment and assumptions are required in performing the impairment tests, principally in determining the fair value of each reporting unit and the indefinite lived intangible assets. While we believe our judgments and assumptions are reasonable, different assumptions could change the estimated fair values and, therefore, impairment charges could be required. Significant negative industry or economic trends, disruptions to our business, loss of significant customers, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in the use of the assets or in entity structure, and divestitures may adversely impact the assumptions used in the valuations and ultimately result in future impairment charges. Identifiable Intangibles We test indefinite-lived intangibles for impairment at least annually and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. We performed this annual assessment, on a qualitative basis, as allowed by GAAP, for our indefinite-lived trade names as of the second quarter of 2020 and concluded that no impairment existe d. Acquired Identifiable Intangibles PowerA Acquisition The preliminary valuation of identifiable intangible assets of $239.7 million acquired in the PowerA Acquisition includes amortizable customer relationships, vendor relationships, trade names and developed technology, which have been recorded at their estimated fair values. The fair value of the customer relationships was determined using the multi-period excess earnings method which is based on the present value of the projected after-tax cash flows. The fair value of the vendor relationships was determined using the lost income method. The fair value of the trade name and the developed technology was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The determination of the acquisition date fair value of the intangible assets required the Company to make significant estimates and assumptions regarding future revenue growth rates, future cost of sales, operating expenses and earnings before income tax, attrition rate, future cash flows without vendor relationships and discount rates. The amortizable trade name, customer and vendor relationships will be amortized over 15 years while the developed technology will be amortized over 5 years on a straight-line basis. The allocation of the identifiable intangibles acquired in the PowerA Acquisition was as follows:
(in millions) | Fair Value |  | Remaining Useful Life Ranges
Trade name | $ | 21.6 |  |  | 15 years
Customer relationships | 127.6 |  |  | 15 years
Vendor relationships | 87.7 |  |  | 15 years
Developed technology | 2.8 |  |  | 5 years
Total identifiable intangibles acquired | $ | 239.7 |  |  |
Foroni Acquisition The valuation of identifiable intangible assets of $11.1 million acquired in the Foroni Acquisition includes an amortizable trade name, "Foroni®," which has been recorded at its estimated fair value. The fair value of the trade name was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The Foroni® trade name is expected to be amortized over 23 years on a straight-line basis. Cumberland Asset Acquisition The valuation of identifiable intangible assets of $3.2 million acquired in the Cumberland Asset Acquisition includes an amortizable trade name and amortizable customer relationships, which have been recorded at their estimated fair values. The fair value of the trade name was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The fair value of the customer relationships was determined using the multi-period excess earnings method which is based on the present value of the projected after-tax cash flows. The amortizable trade name is being amortized over 10 years on a straight-line basis while the customer relationships will be amortized on an accelerated basis over 7 years from January 31, 2019, the date the Cumberland assets were acquired by the Company. The allocation of the identifiable intangibles acquired in the Cumberland Asset Acquisition was as follows:
(in millions) | Fair Value |  | Remaining Useful Life Ranges
Trade name - amortizable | $ | 0.8 |  |  | 10 years
Customer relationships | 2.4 |  |  | 7 years
Total identifiable intangibles acquired | $ | 3.2 |  |  |
GOBA Acquisition The valuation of identifiable intangible assets of $10.3 million acquired in the GOBA Acquisition include an amortizable trade name and amortizable customer relationships, which have been recorded at their estimated fair values. The fair value of the trade name was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The fair value of the customer relationships was determined using the multi-period excess earnings method which is based on the present value of the projected after-tax cash flows. The amortizable trade name is being amortized over 15 years on a straight-line basis, while the customer relationships are being amortized on an accelerated basis over 10 years, from July 2, 2018, the date GOBA was acquired by the Company. The allocations of the identifiable intangibles acquired in the GOBA Acquisition were as follows:
(in millions) | Fair Value |  | Remaining Useful Life Ranges
Trade name - amortizable | $ | 3.8 |  |  | 15 years
Customer relationships | 6.5 |  |  | 10 years
Total identifiable intangibles acquired | $ | 10.3 |  |  |
The gross carrying value and accumulated amortization by class of identifiable intangible assets as of December 31, 2020 and 2019 were as follows:
| December 31, 2020 |  | December 31, 2019
(in millions) | Gross Carrying Amounts |  | Accumulated Amortization |  | Net Book Value |  | Gross Carrying Amounts |  | Accumulated Amortization |  | Net Book Value
Indefinite-lived intangible assets: |  |  |  |  |  |  |  |  |  |  |
Trade names | $ | 467.5 |  |  | $ | (44.5) |  | (1) | $ | 423.0 |  |  | $ | 467.3 |  |  | $ | (44.5) |  | (1) | $ | 422.8 |
Amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |
Trade names | 343.5 |  |  | (97.7) |  |  | 245.8 |  |  | 316.7 |  |  | (83.7) |  |  | 233.0 |
Customer and contractual relationships | 376.8 |  |  | (162.9) |  |  | 213.9 |  |  | 241.0 |  |  | (142.3) |  |  | 98.7 |
Vendor relationships | 87.7 |  |  | (0.2) |  |  | 87.5 |  |  | — |  |  | — |  |  | — |
Patents | 8.9 |  |  | (2.1) |  |  | 6.8 |  |  | 5.5 |  |  | (1.4) |  |  | 4.1 |
Subtotal | 816.9 |  |  | (262.9) |  |  | 554.0 |  |  | 563.2 |  |  | (227.4) |  |  | 335.8 |
Total identifiable intangibles | $ | 1,284.4 |  |  | $ | (307.4) |  |  | $ | 977.0 |  |  | $ | 1,030.5 |  |  | $ | (271.9) |  |  | $ | 758.6 |
(1)Accumulated amortization prior to the adoption of authoritative guidance on goodwill and other intangible assets, at which time further amortization ceased. The Company’s intangible amortization expense was $32.8 million, $35.4 million and $36.7 million for the years ended December 31, 2020, 2019 and 2018, respectively. Estimated amortization expense for amortizable intangible assets for the next five years is as follows:
(in millions) | 2021 |  | 2022 |  | 2023 |  | 2024 |  | 2025
Estimated amortization expense(2) | $ | 46.3 |  |  | $ | 42.6 |  |  | $ | 40.2 |  |  | $ | 38.5 |  |  | $ | 36.8 |
(2) Actual amounts of amortization expense may differ from estimated amounts due to changes in foreign currency exchange rates, additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets and other events. COVID-19 Impact We continue to monitor the significant global impact and uncertainty as a result of COVID-19 to assess the outlook for demand for our products and the effect on our business and our overall financial performance. This includes our risk of impairment of our goodwill and indefinite-lived intangible assets. Although the full impact of COVID-19 on demand remains uncertain, with impact varying significantly by geographic region, we remain committed to taking the actions necessary to protect our long-term financial performance expectations and position the Company for long-term growth. We expect the macroeconomic environment will recover in the medium to long-term. As a result of our analysis, and consideration of events and circumstances, we concluded based on the previously conducted annual assessment, on a qualitative basis, no impairment of our goodwill or indefinite-lived intangible assets was triggered as of June 30, 2020. The implied fair values of all three of our reporting units, more likely than not, exceed their carrying values at December 31, 2020. In addition, we have not identified a triggering event that would cause us to perform a quantitative goodwill impairment analysis. In management’s opinion, the goodwill balance for our ACCO Brands International reporting unit could be at risk for impairment if operating performance does not recover as expected from the current impacts of COVID-19, if we experience negative changes to the long-term outlook for the business, or if changes in factors and assumptions occur which impact the fair value of our reporting units such as low or declining revenue growth rates, depressed operating margins or adverse changes to the discount rates impacting this reporting unit.

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